Pizza Hut franchise owners head to court in class action

Australian Pizza Hut franchise owners have initiated class action against parent company Yum! Restaurants over alleged business losses and failures.

Pizza Hut franchise owners are claiming that Yum! breached its duties by not allowing franchisees to make a profit when asked to reduce the prices of pizzas allegedly to match competitor, Domino’s Pizza.

The majority of Pizza Hut’s Australian franchises are joining the class action with 288 out of 298 restaurants involved.

It is also known that at least one franchise owner has lodged a complaint with the Australian Competition and Consumer Commission (ACCC).

The ABC has also reported that 32 franchisees are believed to have lost their business since the cheap prices were introduced.

Jim Kartounis who is the president of the Australiasian Pizza Association and a partner of the law firm J. Kartsounis & Co. is representing the plaintiff franchisees.

In June 2014 Pizza Hut franchise owners tried to stop Yum! from forcing them to sell cheap pizzas by seeking an injunction but were unsuccessful.

The ABC’s 7:30 program this week interviewed Pizza Hut franchise owners who made claims of significant financial losses following price cutting directions from Yum!

Western Australian franchise owners, Lyn and Fred Bayakly, told the ABC that their previously award-winning store was forced to close due to head office refusing to stop a trial where pizzas were sold at cheaper prices, despite an alleged agreement that the trial would cease if unsuccessful.

Pizza Hut’s General Manager Graeme Houston has said that Pizza Hut could not comment as the matter is before the courts but said “We are looking forward to finally resolving this matter in court and moving on so we can focus on our core role of helping our franchisees build their businesses.”

Houston has also denied in the Australian Financial Review in 2014 that Pizza Hut’s decision to drop prices was connected with the reduced prices being offered at the time by rival pizza group Domino’s Pizza.